Paul Graham's Essays Part III

0:00 how to make wealth there are a lot of ways to get rich and this essay is about only one of them this essay is about how to make money by creating wealth and getting paid for it the advantage of creating wealth as a way to get rich is that it's more straightforward you just have to do something that people want money is not wealth this paragraph is key to understanding this entire essay wealth is the stuff we want food clothes

0:27 houses cars gadgets travel interesting places and so on you can have wealth without having money if you had a magic machine that could on command make you a car or cook you dinner or do anything else that you wanted you wouldn't need money whereas if you were in the middle of Antarctica where there's nothing to buy it wouldn't matter how much money you had wealth is what you want not money but if wealth is the most

0:52 important thing why does everyone talk about making money it is a kind of shorthand money is a way of moving wealth and in practice they are usually interchangeable but they are not the same thing the people most likely to grasp that wealth can be created are the ones who are good at making things the Craftsmen their handmade objects become store-bought ones but with the rise of industrialization there are fewer and fewer Craftsmen one of the biggest

1:19 remaining groups is computer programmers a programmer can sit down in front of a computer and create wealth a good piece of software is in itself a valuable thing programmers literally think the product one line at a time it's also obvious to programmers that there are huge variations in the rate at which wealth is created at via web which was Paul's startup that he sold to Yahoo at V web we had one programmer who was a sort of monster of productivity I

1:47 remember watching what he did one long day and estimating that he had added several hundred, to the market value of the company a great programmer could create a million dollar worth of wealth in a a couple weeks a mediocre programmer over the same period will generate zero or even negative wealth Steve Jobs repeated A variation of this idea his entire career you must find Extraordinary People is what he would repeat over and over again wealth is

2:15 whatever people want that is a concise description of this essay wealth is whatever people want think about this why combinator's motto which Paul is going to found I think the year after a few months after this essay is written why combinator's motto make something people want when Paul wrote that wealth is whatever people want YC was not founded yet but you could see the thinking behind it was there the way most companies make money is by creating

2:41 wealth nearly all companies exist to do something people want a more direct way to put it would be you need to start doing something people want you don't need to join a company to do that all a company is is a group of people working together to do something people want which is also why there's always Limitless opportunities because people always want new things a way to think about this is my favorite quote on this is Rich from Richard Branson a business

3:05 is just an idea that is going to make other people's lives better now he gets to the part of the essay on working harder which is something that he references a lot in a bunch of his essays it turns out that there are economies of scale on how much of your life you devote to your work in the right kind of business someone who really devoted himself to work could generate 10 or even a 100 times as much

3:25 wealth as an average employee he started this essay that if you wanted to get rid how would you do it and he says I think your best bet would be to start or join a startup that's the very first sentence this is a couple Pages later and we're seeing why main theme it's really hard to generate wealth inside of large companies companies are not set up to reward people who want to do this meaning work 10 or even 100 times harder

3:46 who are not companies are not set up to reward people who want to do this you can't go to your boss and say I'd like to start working 10 times as hard so will you please pay me 10 times as much and one of the reasons Paul says that it's hard to do inside large companies is the lack of measurement and leverage he says to get rich you have to have leverage he's not talking about financial leverage by the way to get

4:05 rich you have to have leverage in the sense that the decisions you make have a big effect if you're in a job that feels safe you're not going to get rich because if there's no danger there's almost certainly no leverage and then he goes into smallness equals measurement that's the second part of this you can measure the value of the work done by small groups the opposite of this is why it's hard to generate personal wealth

4:28 inside of a large company starting or joining a startup is thus as close as most people can get to saying to one's boss I want to work 10 times as hard so please pay me 10 times as much there are two differences you're not saying it to your boss but directly to the customers for whom your boss is only a proxy after all and you're not doing it individually but along with a small group of other

4:50 ambitious people and this line is so fantastic the people you work with had better be good because it's their work that yours is going to get averaged with that is why all of History's Greatest Founders including Steve Jobs say You must find Extraordinary People to work with in fact you might remember this from episode 208 where this interview of Steve Jobs is being done in 1997 and he says that the founders most important job he said recruiting is the Founder's

5:14 most important job back to the essay extra motivation comes from being in a small group by selecting that small of a group you can get the best rowers each one will be in the top 1% that is the real point of startups you are getting together with a group of other people who also want to work a lot harder and get paid a lot more than they would in a big company a startup is not merely 10

5:36 people but 10 people like you Steve Jobs once said that the success or failure of a startup depends on the first 10 employees I agree I'm pretty sure Paul's referencing that same interview that I covered in the book in the company of giants back on episode 208 so let me just repeat that real quick Steve Jobs once said that the success or failure of a startup depends on the first 10 employees I agree a very very able

6:00 person who does care about money will ordinarily do better to go off and work with a small group of peers that's a really important part on 275 which is the first episode I did on Paul Graham when I shared what he would do if he was starting a company now that part really resonated I had a ton of people share it publicly on social media but also send me private messages about hearing that and he says I'm just going to read

6:23 the second part of it real quick he says at every point in the company's growth I'd keep the company as small as I could I'd always want people to be surprised by how few employees we had fewer employees equal lower costs and less time less need to turn into a manager this is the most important point though his punchline here he says when I say small I mean small in employees not Revenue that is very important he's

6:47 writing that tweet I think 15 years maybe even close to 20 years no about 15 years after he's writing what he's writing in this essay this is something you and I talk about over and over again that the people building these companies they don't have 20 things or 100 things that they're GNA they want you to remember they have a handful of core principles that they repeat decade over decade and we see that here a very able

7:08 person who does care about money will ordinarily do better to go off and work with a small group of peers then he gets into the point of what he means about leverage for him technology equals leverage this is a another very important line what is technology it's technique it's the way we do we all do things and when you discover a new way to do things its value is multiplied by all the people who use it and he goes

7:32 into that this is the domain of small companies right small companies are more at home in this world because they don't have layers of bureaucracy to slow them down also technical advances tend to come from unorthodox approaches and small companies are less constrained by convention and I love what he does here he ties this into no one thinks of Walmart as a technology company but he makes the point Sam Walton got rich not by being a retailer but by designing a

7:58 new kind of store go back to the previous page what is technology it's a technique it's the way we all do things few paragraphs later he ties it in Sam Walton the founder of Walmart no one thinks of Walmart as a technology company Sam Walton got rich not by being a retailer but by designing a new kind of store episode 150 and episode 234 if you don't know what Paul Graham is talking about you will see Sam Walton

8:21 experiment decade after decade of trying to find a new kind of store and then stumbling on to this idea it's like oh there's a ton of business out there in all these little small rural towns that all the other big retailers ignored and if you can offer the lowest prices these people will drive far distances just to save money it is also a good idea to go and read about the opening of the first Walmart store the idea that's going to

8:44 generate in the future one of the largest fortunes that a family has ever made in the history of humanity starts off with donkey crap and exploding watermelons that is not hyperbole that actually happened back to the cessi his idea he very next paragraph he talks about one of my favorite ideas that I've learned from him again T taking a very complex idea and breaking it down to the aphorism level run upstairs which means the harder something is to do the less

9:11 competition you're going to have so Paul writes use difficulty as a guide not just in selecting the overall aim of your company but also at decision points along the way at via web one of our rules of thumb was run upstairs suppose you're a little Nimble guy being chased by a big fat bully you open a door and find yourself in a staircase do you go up or down I say up the bully can probably run downstairs as fast as you

9:31 can going upstairs his bulk will be even more of a disadvantage running upstairs is hard for you but even harder for him what this meant in practice was that we deliberately sought hard problems if there were two features we could add to our software both equally valuable in proportion to their difficulty we would always take the harder one not just because it was more valuable but because it was harder we delighted in forcing bigger slower competitors to follow us

9:59 over difficult ground Venture capitalists know about this and have a phrase for it barriers to entry if you go to a VC with a new idea and ask him to invest in it one of the first things he'll ask is how hard would this be for someone else to develop now we gets to the point of what's the catch there is a large random multiplier in the success of any company most startups tank it's common for a

10:22 startup could be developing a genuinely good product take slightly too long to do it run out of money and have to shut down and I think this is a good line to end the essay part before I get to the footnotes the ball you need to keep your eye on here is the underlying principle that wealth is what people want so few businesses really pay attention to making customers happy and just two things in the footnote this last sentence I'll get to

10:47 in one second is a really good point the very end of this paragraph there are many senses of the word wealth not all of them material I'm not trying to make a deep philosophical Point here about which is the true kind I'm writing about one specific specific rather technical sense of the word wealth what people will give you money for this is an interesting sort of wealth to study because it's the kind that prevents you from starving this is the Fantastic

11:10 sentence that a double underline that ends it and what people will give you money for depends on them not you and then I'll end this essay on really just good life advice from Paul this is more on his idea of running upstairs on doing something difficult intentionally this is a good plan for life in general if you have two choices is choose the harder if you're trying to decide whether to go out running or sit home

11:32 and watch TV go running probably the reason this trick works so well is that when you have two choices and one is harder the only reason you're even considering the other is laziness you know in the back of your mind what's the right thing to do and this trick merely forces you to acknowledge it so there's an excerpt from the book I'm going to talk to you about today which is a collection of programs essays it's

11:54 called hackers and Painters big ideas from the computer age okay so I want to start with the essay that the book is named after which is hackers and Painters and I think the point of reading this essay from my perspective is Paul's trying to describe and really teach like it's learning how to make good things so he says when I finished grad school in computer science I went to Art School to study painting a lot of

12:17 people seem surprised that someone interested in computers would also be interested in painting they seem to think that hacking and painting were very different kinds of work then he goes into his main theme Here hacking and painting have a lot in common in fact of all the different types of people I've known hackers and painters are among the most alike what hackers and Painters have in common is that they're both makers what hackers and painters are trying to do is make good

12:42 things and so that ties together with his other essay how to make wealth if you can learn to make good things that people want that is how you build wealth and then what I found so interesting about the next section he's talking about the fact that both hackers and Painters learn by doing and I wrote this is similar to his perspective on how to build a company I was taught in college that one ought to figure out a program

13:04 completely on paper before even going near a computer I found that I did not program this way I found that I like to program sitting in front of a computer not a piece of paper instead of patiently writing out a complete program and assuring myself it was correct I tended to just spew out code that was hopelessly broken and then gradually beat it into shape for a long time I felt bad about this if I had only looked

13:28 over this is so this is such a good point if I had only looked over at the other makers the painters or The Architects I would have realized that there was a name for what I was doing sketching you should figure out programs as you're writing them just as writers and Painters and Architects do and then he goes back to a very interesting thought about the edge that small companies have and is the edge of being

13:50 able to make a truly great product only a small percentage of hackers can actually design software and it's hard for people running a company to pick these out so instead of ting the future of the software of their software to one brilliant hacker most companies set things up so it's designed by committee and the hacker merely implement the design if you want to make money at some point remember this because this is one of the reasons startups win big

14:14 companies want to decrease the standard deviation of design outcomes because you want to avoid disaster so essentially saying hey startups and small groups of people you're going to have more tens but you're also going to have a lot more ones as companies grow they they want to get rid these what he calls oscillations and so they're more comfortable with a bunch of fours maybe four like the four to six range something like that because they're worried about a disaster right

14:37 so big companies want to increase the standard deviation of design outcomes because they want to avoid disasters but when you damp oscillations you lose the high points as well as the low this is not a problem for big companies because they don't win by making great products big companies win by sucking less than other big companies that's a very interesting point and just one R random paragraph in here for you this is he just mentions briefly what he

15:05 looked for when he was interviewing people at his startup at via web when we interviewed programmers the main thing we cared about was what kind of software they wrote in their spare time you can't do anything really well unless you love it and if you love to hack you'll inevitably be working on projects of your own and then he goes back into the importance of learning by doing and really the series of highlights I have here here are on the magic of gradual

15:31 refinement one thing we can learn from the example of painting is is how to learn how to hack you learn to paint mostly by doing it ditto for hacking you learn to hack mostly by hacking because painters leave a trail of work behind them you can watch them learn by doing if you look at the work of a painter in chronological order you'll find that each painting Builds on things learned in previous ones I real this is the same

15:53 exact idea that you see when you read a biography of an entrepreneur you'll find that each idea builds some things learned in previous ones I just referenced Sam Walton is the clearest description of that I think that's a really important idea because I think you and I also do this let me read I'm going to read this again because painters leave a trail of work behind them you can watch them learn by doing if you look at the work of a painter in

16:12 chronological order you'll find that each painting built on things learned in previous ones I think most makers work this way and so that's the learning by doing part then he's saying hey you learn from other examples really I that's what Founders podcast is for us that's what reading these books is right the other way makers learn is from examples to a painter a museum is a referenced library of techniques that's exactly what a biography of an

16:34 entrepreneur is for hundreds of years it has been part of the traditional education of painters to copy the works of the great Masters because copying forces you to look closely at the way a painting is made this is such fantastic such a fantastic idea writers do this too Benjamin Franklin learned to write by summarizing the points in the essays of Addison and steel and then trying to reproduce them hackers likewise can learn to program by looking at good

16:58 programs not just at what they do but at the source code another example we can take from painting is the way that painters are created or excuse me that that paintings are created by gradual refinement I think companies are created by gradual refinement as well now we get to my absolute favorite idea in this entire book and it can be summarized in two words relentlessness wins this sounds like a paradox but a great painting has to be better than it has to

17:28 be so again great painting for our purposes we're talking about a product right this sounds like a paradox but a great product has to be better than it has to be what the hell does that mean for example when Leonardo da Vinci painted the portrait of Geneva deeni he put a juniper Bush behind her head in it he carefully painted each individual Leaf many painters might have thought this is just something to put in the background to frame her head no one will

17:55 look that closely at it not Leonardo how hard he worked on part of a painting didn't depend at all on how closely expected anyone to look at it he was like Michael Jordan Relentless relentlessness wins because in oh my goodness gracious this is just fantastic relentlessness wins because in the aggregate unseen details become visible when people walk by the portrait their attention is often immediately arrested

18:27 by it even before they look at the label and notice that it says Leonardo da Vinci all those unseen details combined to produce something that's just stunning like a thousand barely audible voices all singing In Tune great software likewise requires a fat again great products likewise require a fanatical Devotion to Beauty if you look inside good software this is just like Steve Jobs talking about what he learned from his father right that you're not going to put when you're a

18:57 carpenter you're not going to put a a a piece of like crappy wood on the back of a dresser that you're making even though no one's going to see it he also uses example of the other side of a fence too if you look inside good software you'll find that Parts no one is ever supposed to see are beautiful to when it comes to code I behave in a way that would make me eligible for prescription drugs if I

19:17 approached everyday life the same way and I think that what he's describing there at the very end is common to anybody that's capable of making a truly great product think about it when it comes to code for Show in Paul's case what ever you and I are building right I behave in a way that would make me eligible for prescription drugs if I approached everyday life the same way relentlessness wins because in the aggregate unseen details become

19:41 visible this is first on how to work well with other people the example of painting can teach us not only how to manage our own work but how to work together a lot of the great art of the past is is the work of multiple hands though there may only be one name on the wall next to it in the museum Leonardo was an apprentice in the workshop of some guy's name I don't know how to

19:59 pronounce and painted one of the angels in this painting called baptism of Christ this sort of thing was the rule not the exception when painters work together on a painting they never worked on the same part so again he's really telling us how to work well with other people okay when painters work together on a painting they never worked on the same Parts you never had one guy painting over the work of the other I think this is the right model for

20:20 collaboration and software too when a piece of code is being hacked by three or four different people no one of whom really owns it it will end up being like a common room the right way to collaborate I think is to divide projects into sharply defined modules each with a definitive owner and with interfaces between them that are as carefully designed and if possible as articulated as programming languages that's really good I'm going to read that again the right way to

20:47 collaborate I think is to divide projects into sharply defined modules each with a definitive owner and with interfaces between them that are as carefully designed and if possible as articulated as programming languages now this is the customer obsessed part like painting most software is intended for a human audience you have to be able to see things from the user's point of view from the customer's point of view it turns out that looking at things from other this is so good it turns out that

21:15 looking at things from other people's point of view is practically The Secret of success and finally I'll just end this essay this part on this Essay with just one line it's such a great line I feel like I should put like print it out and pain on the wall you only get one life you might as well spend it working on something great so then I just want to pull out a few highlights from this other essay he wrote this back in

21:42 September 2001 it's called the other road ahead and I'm reading it to you because one I think the ideas are good and two this is many years before he founded Y combinator and again we see like the pre history this like what he just talked about is if you you go and see a a painters you can see like the Chron if you look at a a painter's work in chronological order you can see like the gradual refinement how one idea

22:03 built on another you can see the same thing in writing in in Paul's writing and so Paul writes there are only two things you have to know about business build something users love and make more than you spend that made me think of one of my favorite quotes I've read this on you know I don't know dozens of podcasts in the past but it comes from Don Valentine the founder of seoa and he says there are two things in business

22:24 that matter and you can learn this in two minutes high gross margins and cash flow all companies that go out of business do so for the same reason they run out of money and so back to Paul the less you spend the easier it is to make more than you spend I'm going to read something if you have access to Founders daily this is episode 12 on Founders daily but it's from an essay that Paul wrote in 2008 and we're going

22:48 to see the ideas is very similar to what he's writing in the book that I'm holding my hand with that this essay was published in 2001 and so now this is from his essay why to start a start up in a bad economy it says I'm reading directly from the podcast player if you have learned one thing from funding if we have learned one thing from funding so many startups is that they succeed or fail based on the qualities of the

23:06 founders the economy has some effect certainly but as a predictor of success it's a rounding error compared to the founders which means that which means that what matters is who you are not when you do it if you're the right sort of person you will win even in a bad economy if you're worried about threats to the survival of your company this one of my favorite Parts if you're worried about threats to the survival of your

23:24 company don't look at them in the new don't look for them in the news look in the mirror fortunately the way to make a startup Recession Proof is to do exactly what you should do anyway run it as cheaply as possible for years I've been telling Founders that the shest route to success is to be the Cockroaches of the corporate world what writing that's such because that that again great writing just I always say like reading a

23:46 great book is is it's like a movie for the mind the words that are on the page are going to put an image really great words on the page are going to put an image in your mind and as soon as I read read that like I see something in my mind right I've been telling Founders for the route to success is to be the Cockroaches of the corporate world the immediate cause of death in a startup is

24:03 to is always running out of money which is exactly what Don Valentine just told us so the cheaper your company this is the punch line here so the cheaper your company is to operate the harder it is to kill so let's go back to this essay that from the book that I'm holding my hand the less you spend the easier it is to make more than you spend as for building something users love here's some general tips start by making

24:24 something clean and simple that you would want to use yourself the standard to compare your software to or and your product right the standard to compare your product to is what it could be not what your com current competitors happen to have use your software you yourself all the time use your product yourself all the time okay so I want to jump to Paul's essay mind the gap when people care enough about something to do it

24:49 well those who do it best tend to be far better than everyone else there's a huge gap between Leonardo da Vinci in second rate contemporaries a top ranked professional chess player could play 10,000 games against an ordinary Club player without losing once like chess or painting or writing novels making money is a very specialized skill but for some reason we treat this skill differently you get paid by doing or making

25:19 something people want and those who make more money are often simply better at doing what people want Steve Jobs saved a company that was in terminal decline the way I think about what Paul's about to get into right here is Apple buys next for what 450 million 500 let's I think it's 450 million let's just say 500 million they paid half a billion dollars essentially to rehire Steve Jobs and it was the bargain of the century

25:44 Steve Jobs saved a company that was in terminal Decline and not merely in the way a turnaround specialist does by cutting costs he had to decide what he had to decide what Apple's next product should be few other people could have done it it may seem unlikely in principle that one individual could really generate so much more wealth than another what would Apple's next product look like if you replace Steve Jobs with a committee of a hundred random people

26:12 these things don't scale linearly which is also probably why we don't understand them intuitively then he gets into the fact that people you know complain about oh this this profession gets paid so much more than the other profession and Paul's point is that in a free market prices are determined by what buyers want people like baseball more than poetry so baseball players make more than poets to say that a certain kind of work is underpaid is thus identical with

26:36 saying that people want the wrong things so that was an interesting point my interpretation for myself the note I love left for myself on this page is this means you should find the intersection of what you are good at and what people want and then he spent some time writing about you know most people think there's a lot of people to think maybe not most people a lot of people think that the amount of wealth in the

26:54 world is it's like a pie it's like static and as we know from Paul writing in his other essays is that's not true you can actually create wealth and you create wealth by making things that other people want thus increasing the size of the pie Steve Jobs and Steve wak didn't have to make us poor to make themselves Rich quite the opposite they created things that made our lives material materially richer and I don't think he says it explicitly in this

27:18 essay but implicitly it's like well technolog is just going to lead to a more an ever increasing variance in the amount of productivity that one person can have and therefore an ever increasing variance in the amount of wealth that one person has and one person doesn't and so if you have an entire society that thinks that people only get Wealthy by stealing or taking from other people like for example Steve Jobs is getting richer so therefore

27:39 somebody else must be getting poor if Society doesn't catch up to understanding that wealth is not finite and something that should be growing over time it could lead to a lot of you know social unrest and cultural issues and so he goes back to this main theme that technology is leverage remember he's writing this this essay in 2004 this is only you know incre has increased even more so in our time and it looks like you

28:02 know we continue unabated and so this section is called the lever of Technology will technology increase increase the gap between the rich and the poor it will certainly increase the gap between the productive and the unproductive that is the whole point of Technology with a tractor a farmer could plow six times as much land in a day as he could with a team of horses but only if he mastered a new kind of farming that is a very excellent point about the

28:24 value of learning about and then using technology ology and that most people want won't actually if you take two farmers that have both spent their entire lives plowing their field with a team of hor a team of horses the one that is reluctant to change the one that is reluctant to learn about new technology is going to be left in the Dust by the other one that isn't so with a tractor a farmer could plow six times

28:44 as much land in a day as he could with a team of forces but only if he mastered a new kind of farming I've seen the lever of Technology grow visibly in my own time in high school I made money by mowing lawns and scooping ice cream at Basin Robins this was the only kind kind of work available at the time now high school kids could write software design websites but only some of them will the

29:03 rest will still be scooping ice cream it's another great point I remember very vividly when in 1985 when in 1985 improved technology made it possible for me to buy a computer of my own within months I was using it to make money as a freelance programmer a few years before I couldn't have done this a few years before there was no such thing as a freelance programmer that's a great illustration of his main idea that wealth can more

29:27 wealth can always be incre always be created no one is getting poor because Paul Graham is sitting there now making money as a freelance programmer in 1985 but he is getting wealthier and then to wrap this section up with a fantastic line and I'm betting everything I have on this idea being accurate so we should expect to see ever increasing variation in individual productivity as time goes on this is an idea that I've just been absolutely obsessed with for a long for

29:54 many many years it's how big a difference can a single person or a small team make in fact there's a video saved on my phone I recorded the video on September 29th 2018 and I cannot find the video that I was I was making a recording of a screen which is really funny like filming my computer with my phone but it's actually Paul Graham on stage he's at this thing I zoomed in on his badge it's something called the

30:17 cloudant con so the cloudant conference he's wearing a navy blue sweater if anybody can find this video for me and I think he's being interviewed by the founder of cloudant and the founder ask him this question how big a difference can a single developer or a small team make and he says the answer is increasingly much increasingly much remember he's saying this in 2018 it's really what he's writing a variation of the idea that he's writing all the way

30:41 back in 2004 that hey we should expect to see ever increasing variation in individual productivity as time goes on because the lever of technology is going to keep increas increasing right so it says the answer is increasingly much increasingly much our commed said if he had a lever long enough he could move the world well nowadays from your bedroom thanks to all the infrastructure that exists combination of Open Source and services like AWS and the like the

31:02 lever is enormously long you could be sitting in your bedroom programming a single person and if you make something that people like and is novel it can have a really huge effect that is very exciting you guys may take this for granted but anybody who is old as me realizes that was not the case 20 years ago it will be interesting to see how far it goes because it is certainly not over yet and then he's asked the

31:26 follow-up question how far can it go and his answer gives me goosebumps always further than people expect and then before I leave this essay I just got to point bring something to your attention Paul's constantly putting what he's talking about in historical context he's like the key for societies for countries is Founders the people that have founder mentality they're going to go build wealth they will make our societies richer but the only way they'll make our

31:54 societies richer if you let them keep a percentage of the wealth that they create and then he says a lot of countries in history make the mistake where they turn this off they don't let people with like founder mentality people create trying to build new companies new forms of wealth keep the fruits of their labor and when they try to decrease the variance in economic out like this person has too much wealth compared to the average person the end

32:16 result is making everybody poor so he says at various times and places in history whether you could accumulate a fortune by creating wealth had been turned on and off this is fantastic Northern Italy in 800 off Northern Italy and 1100 on central France in 1100 off England in 1800 on England in 1974 off I didn't know what he's talking about here and then he puts it into parentheses which is fantastic so in England 1800 you get to keep your wealth it's on

32:48 England in 1974 it's off because they give a 98% tax on investment income that's crazy United States in 1974 on we've even had a twin study West Germany on East Germany off in every case their creation of wealth seems to appear and disappear that's a really important part like the noise of a fan as you switch on and off the prospect of keeping it and he's got a fantastic way to distill the idea he's talking about if you let Henry

33:16 Ford get rich he'll make you a tractor to replace your horse so before I jump into his next essay which is called beating the averages I want to read I have notes on this this podcast Paul was on back in 2009 it's an episode of this podcast called in econ talk the name of the ti the title of the episode is Paul Gram on startups Innovation and creativity but there's a quote he mentions on hackers and Painters that I

33:40 think it related to is going to relate to this essay and the next essay I'm going to share with you and this is what Paul said he says I found that the interesting parts of programming you can't make scientific startups are the same what makes a programmer good at programming is more like what makes a painter good at painting it is something a little less less organized it is taste a sense of design a certain Knack and so

34:03 I just want to pull out a a few random ideas from this this essay called beating the averages so the first idea is thinking of ideas as tools if a painter were offered a brush that would make him a better painter it seems to me that he would want to use it in all of his paintings wouldn't he the second idea is aiming for Monopoly a really way you think about it what he was referencing earlier you should have a

34:21 barrier to entry in what you're doing what you're doing is easy to copy a lot of people are going to copy it and that the best businesses are very hard to copy in later essays he uses example of like stripe and Airbnb to illustrate this point and so he writes software is a very competitive business prone to Natural monopolies a company that gets software written faster and better will all other things being equal put its competitors out of business Paul writes

34:44 a lot about the advantages that small teams and small companies have over larger ones but there's also disadvantages and one thing that startups cannot or small companies cannot afford to do is not focus and so he has this idea you should ignore what other people we doing and consider only what will work best in a big company you can do what all the other big companies are doing but a startup can't do what all other startups do I don't think a

35:06 lot of people realize this even in startups then he goes into the fact that a small company can actually succeed by only need they actually only need to be good at one thing when we started via web we had no experience in business we didn't know anything about marketing or hiring people or raising money or getting customers neither of us even ever even had what you'd call a real job the only thing we were good at was

35:27 writing software and we hoped that would save us and then he talked about some other good ideas they did when he was building a startup one they focused on speed our development cycle was so fast that we could sometimes duplicate a new feature within a day or two of a competitor announcing it in a press release and he said the key to that was that they had a technical Advantage he talks a lot about this book in this

35:46 book about programming langu languages I've admitted this he felt that the fact that they used this I guess unknown but really Advanced programming language called lisp was a massive Advantage to via web he says in business there is nothing more valuable than a technical Advantage your advantage your competitors don't understand let me read that again in business there's nothing more valuable than a technical Advantage your competitors don't understand he thought list was that for them and he we

36:14 see an idea that you and I have talked about over and over again Bad Boys move in silence for hundreds of years of the history of Entrepreneurship we see people they have an edge and they shut up about it I never said anything publicly about lists while we working on V web this was no accident a startup should give its competitors as little information as possible okay so now I want to jump to Paul's essay called taste for makers he

36:37 says I was talking recently to a friend who teaches at MIT his field is hot now he's writing this back in 2002 his field is hot now and every year he is inated by applications from wouldbe graduate students a lot of them seem smart he said what I can't tell is whether they have any kind of taste taste you don't hear that word much now and yet we still need the underlying concept whatever we call it what my friend meant

37:03 was that he wanted students who were not just good technicians but who could also use their technical knowledge to design beautiful things for those of us who design things these are not just theoretical questions we need good taste to make good things let's try considering it as a practical question how do you make good stuff so again I think all this ties together right he says how do you know what to work on once you know what to work on how do you

37:30 make something great why is that important because if when you make great things or good things that other people find valuable that is how you build wealth all of these ideas connect across multiple decades and I don't know hundred different essays it's really remarkable and I don't know if I that would have clicked if I haven't spent you know the last few weeks not only reading through his entire website but also picking up this book and reading

37:52 this as well so back to this idea of taste remember this is taste for makers if you mention taste nowadays A lot of people will tell you that quote taste is subjective they believe this because it really feels that way to them saying that taste is just personal preference is a good way to prevent disputes the trouble is it's not true you feel this when you start to design things whatever job people do they naturally want to do

38:15 it better football players like to win games CEOs like to increase earnings it's a matter of Pride and a real pleasure to get better at your job which is why I think people read essays like this read biographies of people that achieve great things whatever whatever job people have they naturally want to do better as at any job as you continue to design things you'll get better at it your tastes will change and like anyone who gets better at their job you'll know

38:40 you're getting better if so your old tastes were not merely different but worse poof goes the axom that taste can't be wrong and then he talks about examining what other people learned about designing things in different domains like the idea that you a hacker can learn from a painter just like a writer can learn from a hacker or a Founder can learn from a baseball player or a poet and this is part of Paul's own personal curriculum as he's gone and

39:06 spent his entire life trying to learn and answer this question for himself and his conclusion is exactly what I noticed by reading hundreds of biographies which you and I talk about all the time once you start to examine the question it's surprising it's surprising how much different fields ideas of beauty have in common the same principles of good design crop up again and again and so the rest of the essay is what is good design he has these headings like good

39:30 design is simple good design is timeless and so I'm just going to read a couple of the highlights from that good design is simple you hear this from math to painting less is more it means much the same thing in programming in writing it means say what you mean and say it briefly it seems strange to have to emphasize Simplicity you think simple would be the default but something seems to come over people when they try to be

39:53 creative when you're forced to be simple you're forced to face the real problem when you can't deliver ornament you have to deliver substance next one is good design is timeless if something this is such a great line I've never heard before if something is ugly it can't be the best solution there must be a better one and eventually someone else will Discover It aiming at timelessness is a way to make yourself find the best answer it's so one of my favorite

40:19 sayings and something I don't even think I have any other good filter besides this is that time is the best filter Paul gets into that now strange enough if you want to make something that will appeal to Future Generations one way to do it is to try to appeal to past Generations if you can make something that appeals to people today and would also have appealed to people in 15 in the year 1500 there's a good chance that

40:39 it will appeal to people in the year 2500 next one is good design is suggestive Jane Austin's novels contain almost no description instead of telling you how everything looks she tells you her she tells her story so well that you envision the scene for yourself likewise a painting that suggests is usually more engaging than one that tells everyone makes up their own story about the Mona Lisa in software it means that you should give users a few basic elements

41:06 that they can combine as they wish like Lego then he brings up a main theme that he repeats over and over again in different essays different time periods it's like the the value in hard work good design is hard if you look at the people who've done great work one thing they all seem to have in common is that they worked very hard if you're not working hard you're probably wasting your time hard problems call for great

41:29 efforts good design looks easy like great athletes great and I think these good design is hard and good design looks easy I think the ideas in both of these sections really relate to each other like great athletes great designers make it look easy mostly this is an illusion the easy conversational tone of good writing comes only on the eighth rewrite what I joted down to myself when I got to that part something that I learned from aror shener that's

41:54 really important everything is reps reps reps reps you're not going to pick up any of these books and see a Founder an entrepreneur an athlete an Explorer an artist do their best work in year one or two or three it is year after year after year of practice practice practice everything is reps reps reps in most Fields the appearance of e this exactly what I was saying here in most Fields the appearance of ease seems to come

42:19 with practice perhaps what I love that word perhaps what practice does is train your unconscious mind to handle tasks that used to require conscious thought this one was very interesting good design resembles nature this is going to be this is something that the founder of De Visa de Hawk I covered him back on episode 260 talked about over and over again he spent a lot of time in nature he had a lot of ideas on how to

42:42 build his business by observing how things work in nature Paul Graham writes good design resembles nature nature and this is why Nature has had a long time to work on the problem so it's a good sign when your answer resembl Natures next one good design is redesign it's rare to get things right the first time experts expect to throw away some early work they plan for plans to change it takes confidence to throw work away you have to be able to think there's

43:10 more where this came from mistakes are natural instead of treating them as disasters make them easy to acknowledge and easy to fix Leonardo da Vinci more or less invented the sketch as a way to make drawing bear a greater weight of exploration and then good design can copy attitudes to copying often make a round trip a novice imitates without knowing it next he tries consciously to be original finally this is this is excellent finally he decides it's more

43:40 important to be right than original the ambitious are not content to imitate the second phase in the growth of taste is a conscious attempt at originality I think the greatest Masters go on to achieve a kind of selflessness they just want to get the right answer and if part of the right answer has already been discovered by someone else that's no reason not to use it they're confident enough to take from anyone without feeling that their

44:06 own Vision will be lost in the process and then good design happens in chunks so he's going to talk about actual physical places I'm going to read from this book go like hell I think I covered it back on Founders number 97 Enzo Ferrari came to the exact same conclusion that Paul Graham is at the in the essay andz so said is my opinion that there are innate gifts that are a peculiarity of certain regions and that

44:32 transferred into industry these propensities May at times acquire an exceptional importance in Modena where I was born and set up my own Works meaning his own company there is a species of psychosis for racing cars back to Paul Graham good design happens in chunks something was happening in Florence in the 15th century and it can't have been genetic because it isn't happening now nothing nothing is more powerful this is again I feel the main another main theme

45:00 about the importance of having ambitious people like know each other to be around each other I think I talked about this in both the the last two episodes of Paul Graham he's saying it again here nothing is more powerful than a community of talented people working on related problems great work still comes disproportionately from a few hot spots and then I absolutely love how he ends this he talks about that great work good design usually comes starts with

45:25 somebody say hey I could do better than that in practice it is easier to see ugliness than to imagine Beauty most of the people who've made beautiful things seem to have done it by fixing something that they thought ugly remember that's not just an appearance what did Steve Jobs say design is how it works people think it's it's how it looks it's like no it's how it works so you could apply this to a product you're building an

45:45 industry you just see something it's like this isn't quite right in practice I think it's easier to see ugliness and to imagine Beauty most of the people who've made beautiful things seem to have done it by fixing something they thought ugly great work usually H seems to happen because someone sees something and thinks I could do better than that intolerance for ugliness is not in it in in of itself enough you have to understand a field well before you

46:10 develop a good nose for what needs fixing another important point you have to do your homework and this is the absolute perfect sentence to end on I love this the recipe for great work is very exacting taste plus the ability to gratify it and that is where I'll leave it for the full story highly recommend buying the book you can read the essays for free online but it's so nice having some of them in book form and I hope

46:37 some some publishing helps one day prints all of his all of Paul's essays you know probably have to be a multi you know multi-book series but I would love to own them in you know physical book form so if you are going to pick up the book it'd be helpful if you use the link that's in the show notes available on your podcast player and also available at Founders podcast.com you'll be supporting the podcast at the same

46:58 time I have already been inputting a bunch of the highlights not only from Paul's essays but also from this book into my readwise the past few weeks readwise has already started re reminding me a lot of the highlights that that I previously read I think it's a super valuable tool it's my favorite app that I pay for and I could not make the podcast without it if you read a lot and you want to remember what

47:18 you read and you want to use the same app that I do you go to read wise. i/f Founders and you can try it for 60 days for free and see if you like it as much as I do that is 277 books down 1,000 to go and I'll talk to you again soon